Loading Website ...

In general terms, this is one of the most frequent questions we get from prospective clients. So then, How do you file U.S. tax returns while in Canada?

The first question we need to ask is whether you are actually required to file U.S. tax returns. Generally speaking, U.S. citizens and Green Card holders are required to file U.S. tax returns regardless of where they live. Therefore Americans living in Canada, whether they have recently moved to Canada, or have been in the country their entire lives, are required to file U.S. tax returns, in addition to their regular Canadian tax returns.

Once you have established that you are required to file U.S. tax returns, the next step will be to assess your actual filing requirements. Please keep current with US cross border tax changes as tax law changes can significantly affect your annual filing requirements.

What forms need to be filed?

Assuming you are above the required income filing threshold, you will need to complete form 1040 for the current year. The 1040 is the general income tax form, and is really only 2 pages long. The bulk of your annual U.S. income tax filings will be comprised of additional forms and schedules.

What other tax schedules need to be filed?

Outlined below is a list of general forms that may be required. Note that these forms are not always required, and additional forms could be required, based on your particular tax situation:

Form 1040 – As discussed above.

Schedule AItemized Deductions: In most cases, especially for U.S. taxpayers in Canada, schedule A will not be required, either because they may not need to itemize, or simply because they have paid enough Canadian taxes to reduce any U.S. taxes owing via Form 1116 – Foreign Tax Credits (see below). Note that itemized deductions changed under the new Trump tax changes. You’ll want to review these changes to ensure proper deductions are allowable.

Schedule B Interest and Dividends: Schedule B reports interest and dividends from all worldwide sources. Note that Schedule B has some important questions related to FBARs and foreign trusts that need to be accurately answered. See more below.

Schedule CProfit or Loss from Business: Schedule C reports business activities. For those in Canada remember that Self-Employment (SE) tax otherwise payable on net business profits would be exempted.

Schedule DReporting of capital gains and losses: Both gains/losses from Canadian and U.S. sources need to be reported on Schedule D. Canadian security sales need to be converted at their original purchase dates and respective sale dates as well.

Schedule ESupplemental income and loss: In most cases, Schedule E reports profits and losses from rental activities, however, you will also use this schedule to report royalties earned. Note that special depreciation rules apply to rental properties owned by U.S. citizens. For example, unlike Capital Cost Allowance (CCA) for Canadian purposes, depreciation is mandatory in the U.S.

Schedule F – Profits and losses from farming activities.

Are any other tax forms or disclosures required?

Form 8965Health Coverage Exemption: If you live in Canada, and are covered by universal health care, you should be exempt from any additional U.S. health premium taxes.

SE Tax Exemption – If you reside in Canada, and are exempted by the Canada-U.S. social security agreement, a disclosure to this affect will need to be filed with the 1040.

Form 1116Foreign tax credit: As you will be reporting your worldwide income on both your Canadian and U.S. tax return each year, you will need to ensure that you do not pay both Canadian and U.S. taxes on the same income. You can claim all the Canadian taxes you have paid on the income reported to the U.S. on Form 1116. Note that Form 1116 is completed separately for general (employment, business, pension, etc.), passive (interest, dividends and capital gains) and resourced (income only taxable in Canada) income. In many cases, you will have several 1116 forms in addition to Form 1116 AMT, if applicable.

Form 2555Foreign earned income: Instead of using Form 1116 to reduce U.S. calculated taxes on Canadian income, you can also fully exempt Canadian earned income (employment and business) via Form 2555. For 2015, you will be able to exempt up to $100,800 of earned income from your U.S. tax return.

Form 8812Child tax credit: You will need to be careful about claiming this credit if you live in Canada. Technically speaking this credit is only available to taxpayers that have a dependent, that is also a U.S. citizen or resident.

Form 8960Net Investment Income Tax (NIIT): Commonly referred to as Obamacare tax, NIIT is additional tax on investment income for taxpayers who exceed a certain income threshold. The threshold for filing status “Married filing jointly”, “Married filing separately” and “Single” are $250,000, $125,000, and $200,000, respectively. Any investment income earned above this threshold will result in an additional tax of 3.8% on this income. Note that foreign tax credits from form 1116 will not be available to reduce this tax, however, NIIT on U.S. source income may be claimed as foreign taxes for Canadian foreign tax credit calculations.

Form 8621Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund: For those taxpayers that own traditional PFICs or Canadian mutual funds form 8621 will be required to report these investments. Note that not all mutual fund companies issue PFIC statements and you’ll want to ask your investment advisor about owning Canadian mutual funds as a US citizen in Canada.

Form 8938Statement of specific foreign financial assets: This form, similar to the FBAR form below, reports specific foreign financial accounts held by the U.S. taxpayer. Unlike the FBAR, however, the filing threshold is much higher, and the reporting also includes accounts such as foreign pensions and life insurance policies.

Form 5471Report of controlled foreign corporations: This form will be relevant to Americans with incorporated businesses in Canada. These businesses are considered “foreign” for U.S. tax purposes and therefore require Form 5471 to be filed.  The form reports the balance sheet, income statement, and equity statement of the company throughout the year, converted to U.S. dollars.

The form also serves to calculate income that is not eligible to be deferred for U.S. tax purposes. Under U.S. tax law, an individual is not able to defer investment income (and some other specific types of income) within a foreign corporation. This income inclusion is outlined under Subpart F of the U.S. tax code. In essence, any investment income earned in a Canadian company controlled by a U.S. taxpayer needs to be taxed on their personal tax return, regardless of whether they distributed this income within the current period.  Specific tax planning is necessary to ensure adverse tax consequences do not result from Subpart F income inclusions.

In 2017 and 2018 the new Trump tax changes included provisions that taxed the retained earnings of controlled foreign companies (Canadian companies controlled by Americans) and active business income of these companies going forward. If you are a US Citizen that controls a Canadian corporation please ensure to get professional advice on how to manage your shareholders and internal earnings of the corporation.

Form 3520/3520-A – These forms may be required if you are the owner, trustee, or beneficiary of a foreign trust (including Canadian trusts). These forms may also be required if you are gifted more than $100,000 from a non-resident alien of the U.S.

Do I need to file any Canada-U.S. Treaty Elections?

The Canada-U.S. tax treaty contains articles that outline how specific types of income are treated for tax purposes between both countries. Often, in order to take advantage of some of the exemptions in the treaty timely treaty elections need to be filed.

Note that these elections are filed using form 8833 Treaty based return position disclosure and late filing of form 8833 can lead to additional penalties. Specific treaty elections are beyond the scope of this article, however if you have specific questions about treaty elections please leave a comment below.

Do I Need to File FBARs (Form 114)

American taxpayers that own foreign bank or investment accounts are subject to Form 114 filing requirements. If the aggregate total “highest balance” in all your foreign financial accounts exceeds $10,000 in the year, you are required to file FBAR forms. As noted above, you will be asked this question on Schedule B. Form 114 is now filed electronically, and can be downloaded and submitted here.

When are my tax returns due?

Your U.S. tax return and payment are due April 15th, however, if you are out of the U.S. on the filing date (which will be the case for most Americans in Canada), your due date is extended to June 15th. Unless you are self-employed, the due date of your Canadian tax return is April 30th. Whenever possible, it is best to file both returns by April 30th.

Are there any penalties for late filing U.S. tax returns?

There are potential penalties for late filing of tax returns and forms, as well as for underpayment of tax. There is a penalty of 5% of unpaid taxes by the due date of the return, up to a maximum of 25%.

There are also penalties for specific forms that may be filed late. For example, Form 114 has a penalty of $10,000 per unreported account, to a maximum of 50% of the highest balance in all the accounts for that specific year. Also, foreign reporting forms such as Form 5471 (Controlled Foreign Corporation Reporting) carry a late filing penalty of $10,000 per year.

Other penalties include accuracy related penalties, unpaid withholding tax penalties, and fraud penalties, to mention a few.

Does the IRS send Notice of Assessments similar to CRA?

No, unfortunately the IRS does not issue automatic filing receipts once the tax returns have been assessed. You can however request a transcript of you U.S. tax return here.

I have investments in the US, should I keep them in the US or move them up to Canada?

We get this question a lot. Americans that have moved up to Canada often continue to have investments down in the US. These investments may include non-registered investments, ROTH IRA, traditional IRA, 401k assets, revocable trust assets and education savings plans. Note that in most cases US advisors are not legally able to manage investment accounts for Canadian residents (even though they may be US citizens). For more information on managing your US investments please visit our guide here.

I need help in filing my U.S. tax return? Can you help?

Definitely, we can help you in advising on U.S. tax and cross border issues, as well as the preparation of your U.S. and Canadian tax returns. For more information on how I can help. please email me at phil@hutcheson.ca or call me at 250-661-9417.


Phil Hogan

41 Responses to “How to File US Tax Returns in Canada?”

  1. Devesh B says:

    Hi, I am a Canadian citizen. I got married this year and my wife is a US citizen working in the USA. I am still working in Canada as my green card is in process. I am filing my taxes in Canada. Do I need to include her income in the USA in my tax filing?

  2. Linda Adsetts says:

    My husband is a Canadian citizen who worked in the US on and off and he has a TIN #
    In 2019 the company he repped went under and he did not work at all in the US. Do we have to file a nil return?
    Thanks so much.

  3. Evan says:

    Hi I’m a Dual American/Canadian citizen living in Canada and preparing a return for the first time. I’m wondering about form 8833 and if I need to file this form. I’m preparing a basic return that includes income from Canadian T4’s and a small amount of tip income. I’m not familiar with any of the treaty provisions and not sure where to find information on them, or if I even need to file provisions at all. Let me know if you could help me out with any info. Thanks!

  4. Dawn says:

    Hi Phil, I am a US citizen living and working in Canada. I have a BASIC return to file but not sure I have been doing it right as I am doing it myself. I am just wondering how much your services are so I know I am doing this right. It seems silly to pay for someone to do my taxes but I also don’t want to be penalized for doing them wrong. Please let me know.

    PS. I completely forgot to do my US taxes last year and still need to file this years too.


    • Phil Hogan Phil Hogan says:

      Why does it seem silly to pay someone to help with taxes? I pay people to service my car, mainly because I have no idea how to do it myself.


  5. Amjad says:

    I am a Canadian and I received a 1042-S ( Foreign Person’s US Source Income Subject to Withholding). Do I need to file a US Income tax? IF yes, how do I go about doing that?

    Thank you

  6. Sean says:

    US Citizen who common-law married my fiance to move up to Canada. My wife is a medical student at a school in Toronto.

    I work remotely for a US company and earn 100% US income. Most of our liquid funds are in American accounts but we jointly own a Canadian bank account.

    We also have American investment accounts.

    We are not full-time residents. I have an 18-month TRP (filing for permanent now but don’t expect results for a year). Wife has 3.5 years residency to finish her program.

    I have no idea how all of these facts interface with Canadian or US tax authority rules. We could very much use some expert advise.

  7. Scott says:

    I am a Canadian / American Dual citizen. I am enrolled in Canadian Tax Free Savings accounts, and from what I understand any interest accumulated within those accounts are not tax free from a U.S. tax perspective. I have been listing interest earned as taxable in the U.S. tax forms. Now I am reading that TFSA’s should be considered as foreign trusts, and elsewhere that the TFSA should be classified as pension protected under Article XVIII of the Canada/US tax treaty. This is all very confusing, particularly when in comes to TSFA Mutual funds which I am considering closing due to what could be considerable reporting requirements with little future tax benefits. Any suggestions or pointers where I can find more information on the Tax implications of a dual citizen holding a TFSA would be greatly appreciated. Thank you.

  8. Joe says:

    Hello, my daughter is a US citizen, and has been a resident of Canada since she was 6 years old. She’s now 19 and is working in Canada. She’s never filed in the U.S. (or Canada) before. I believe we can file online in Canada, and was wondering if she can file online in the U.S. Her earnings will be very small (less than $10,000 for 2018.) Can you advise on what the best course of action would be to make sure she maintains proper and legal standing w.r.t. U.S. tax laws?

  9. MaKaela Carter says:

    I am a US citizen. I lived in Canada until May 2018. Half of my income in 2018 is Canadian and half is US income. What do I need to file US taxes? Canadian taxes?

  10. jasmir says:

    I’m a US citizen and my wife is Canadian only. most of my income is from Canada and I have some US pension income that I report on my 1040NR each year. I don’t normally pay very much tax on my US pension income, but I’ll be taking out much more from my IRA this year and I’ve estimates around 18% US tax. I’ve done a foreign tax credit on my Canadian return for investment income but not for my US pension income because I never paid much US tax on my pension and/or IRA.

    Also, is there any way to reduce the tax I pay on the withdrawals from my pension?



    • Phil Hogan Phil Hogan says:

      Hi Jasmir

      Some of what you outline above doesn’t make sense. If you’re a US citizen you should be filing a full US 1040 return and related forms such as FBARs and 8938s. Your worldwide income needs to be included on your 1040, not just your US source income. You’ll only be required to pay 15% tax on your US pension income as the additional tax will be resourced to Canada (fully taxed in Canada with a foreign tax credit for the 15% paid to the US).

      Other than Canadian deduction there will not be a great way to reduce tax on the pension. If I’m correct about the above filings you’ll want to ensure you adjust your previous tax returns to include your worldwide income. Give me a call and we can chat.

  11. Dave Massola says:

    I am a dual Canadian and US citizen that will retire in the USA. When I withdraw my RRSP there will be a Canadian withholding tax of 25%. Is there any way I can offset this amount on my US tax return? Can I draw my US 401K amount and use the withholding tax credit against it?


  12. Kathy says:

    I’m new at this. I moved back to Canada from US…i have dual Citizenship….my permanent resident is Canada…would like to know what form i need to fill out for Income taxes for US.

    Pls & Ty
    waiting for reply

  13. jaswinder says:




  14. jaswinder says:

    hi phil , i amcanadian citizen, i am insurance agent i have a commision income from usa , i filed my taxes in canada , i am wondering if i have to file taxes in usa as well please guide me

  15. Mathis says:

    Hi, I have an American passport and I currently live and working in Canada (and have for the past 3 years.)

    No one seems to want to deal/explain the 8833 form. I even emailed people who file american taxes, but they said they didn’t deal with things like the 8833 form ?

    And I have searched high and low on the internet for how to fill it in myself, to no avail. In addition to this, the IRS seems to take this form very seriously, with fines if it’s filled incorrectly.
    My situation really isn’t that complicated. I make a fixed income here in Canada, and I pay taxes, that’s it. Is there nowhere I can find how to fill in those 6 lines on the form ?

    Do I actually need to file this form ???

    thank you

  16. Doreen Garon says:

    Phil. We are Canadians who sold our winter home in U.S. last year. We will have a capital loss on it and I was wondering if we still have to file a U.S. Income tax form. They did not hold back any money from the sale and we do not have a U.S. ID tax filer numer.
    Any information you can give us would be appreciated. Thank you

  17. Marie Pasion says:

    My mother inherited money from her brother in the US and got a form 1099-R. Tax was withheld at 20%. Does she still need to file a 1040NR (will she get a portion of this tax back under a treaty agreement?)

  18. Dirk Geijsbeek says:

    Good Day,

    I moved from Seattle, WA, USA in OCT 2016 to live in the Toronto, ON area as a Canadian Permanent Resident and Landed Immigrant.

    I started working for a Canadian Bank as a full time “contract” employee (with no benefits) from NOV 2016 to NOV 2017, and I started at another Canadian Bank in NOV 2017 as a full time permanent employee with benefits, including a pension plan, which started this year (2018).

    I have been married to a Canadian Citizen since 2015 (she works in retail part time) and have been living with her since I moved up here in 2016 and we have a joint bank (checking/savings) account and I got my OHIP card 3 months after I moved up here.

    Please advise what CRA and/or IRS forms I should fill out.

    Thank you.

  19. Paul says:

    Hi Phil,

    I’m a Canadian, married with one child who’s 18 yrs. old. First Time to work here in U.S. I’m filing my TAX return here in U.S. and Canada as well. I already have my W-2 form. Need help cause I feel my company only withheld about 21.0% of my total income for TAX. What step do I need to do?

  20. I recently moved to Canada from the USA and I have no idea about my tax situation. So can you please share some information about what I have to do? Do I have to hire an agency for this purpose?

  21. Diane says:

    I am an American who made a *very modest income from one employer in 2016. I am married (to a Canadian) and have a Canadian bank account. I feel very confused about all the different filing schedules involved with the 1040 form.
    I’m guessing I don’t list my income from my T4 where you would put your W2 wages…this is all very confusing.
    Thank you in advance for any help…this is a very complicated process for such a simple income level.


  22. EH says:

    The US-Canada tax treaty stated that full-ear residents of Canada owe normal wage and dividend income to the CRA. Logically, it would seem that taxes should be filed with the CRA, which shares info with the IRS besides. Some people in this situation just file Schedule D every year without 1040 with the IRS I’m told by a tax preparer in the U.S. Technically they “filed”, just not a whole return. There’s no version of 1040 for expats in countries with treaties allocating any of the types of income that taxpayer earned to that country. If a taxpayer files 1040 saying they had income, and don’t pay it because they paid the CRA, isn’t there a risk the IRS will get confused and think you owe the IRS? Is a cover letter filed with 1040 sufficient to avert owing, or should the foreign tax credit be applied instead as though there were no treaty? Do treaty elections need to be made on a form and can that be filed with an amended return?

    I asked the IRS to make a written statement on this matter and they kept sending letters saying they need 45 more days. For 2 tax years I sent Schedule D only and have received no letters indicating this was insufficient to be in compliance. I’ve kept my Canadian address updated with the IRS.

  23. Allen Morgan says:

    1.) Can I eFile form 1040?
    2.) Can I efile FBAR forms?

  24. THOMAS KOREMAN says:

    Do I file the Canadian tax return first and then file the 1040?
    How much do you charge for a U.S. person living in Canada to do
    their U.S. tax return? They earn $24,000 management fees per year.
    2012 income was nil.
    2013 income was nil.
    2014 income is $24,000.
    2015 income is $24,000.
    2016 income is $24,000.
    He is married and living in Canada.
    The spouse is a Canadian doctor.

  25. Mike says:

    I am a non-resident alien of United States – 100% Canadian – I signed a entry level hockey contract ( American team) and received a signing bonus in 2016 ; I was not paid for any other services in the United States – I do not have a SSN or green card – do I have to file a US return?

  26. Michelle says:

    Hi Phil, I was wondering if you could offer some guidance please. I’m a Canadian who won a small jackpot in Las Vegas where of course, they withheld 40% of my winnings. It equates to close to $400 – so trying to determine the best way to maximize what the US Government will “give me back”. Any help is very much appreciated. Thank you in advance.

    • Ron Janes says:


  27. Michelle says:

    Hi Phil,

    My husband is a US Citizen, living in Calgary for over 15 years as a permanent resident, and filing Canadian tax returns for his Canadian income.

    In 2016, in addition to his self-employment income in Canada, he also earned US income that he has on a W2 and also on a 1099-MISC as he spent 6 months in the US.

    He is reporting this income on a US tax return and will be paying US taxes on it. Does he also have to report it on his Canadian tax return given that he’s a US Citizen, with US Source income, and paying US taxes on it?

    Many thanks,

  28. Kathy Millard says:

    I moved from the US to Canada 09/2010 (filing my US returns only for that year). I did not work in Canada until 2/2013 (I had to wait for my permanent resident was approved). This year, I just recently found out I had to file both a US and Canada tax return.

    What is the best way to file now? I would need to file 2013, 2014, 2015 and 2016 (I filed a Canadian tax return all those years).

    Hoping that you can help me.



  29. Kat Spencer says:

    Hi Phil,

    I am attempting to file my American return on my own this year however there are no directions available regarding how to align my T4’s and W2 values. I’ve looked at all my old taxes and can’t seem to line the numbers up event when incorporating exchange rates at the time. I only have one T4 and my previous accountant charged $550 for this. Advice?

  30. Ima Rez says:

    Hello , I’m Canadian artist and travel to US for performing my music show , my promoters paying after they deduct 30 % us tax and 10% commission wire me the rest and other travel expenses manage by my Canadian promoters ans orgnizer ,need all step to do taxes and as Canadian to do this for us I m having p2 performing permission and EIN number that’s all
    Appreciated any help
    Ima Rez

  31. Tim says:

    Hi Phil,

    I am a Canadian citizen who moved back to Canada in August. I had spent the last four years in the USA, 2 as a student and 2 working under the TN visa. Do I need to include the income I earned in Canada after my return in August on my USA tax return?


  32. Stephanie Ayon says:

    I live here in Edmonton Alberta since 2013, I am currently a Permanent Resident now since 2015. I am an American Citizen. I moved here because my mother passed away in 2013, i now live with my father. I only worked for my mother as her Caregiver since 2007 to 2012, five years. I never filed Tax Returns in the US. I am also planning to be a dual citizen in the near future and I want to know how to file US tax.
    I want you advice!
    Thank you!

  33. Hello, I am a canadian who is partner in an american LLC. Doing my work virtually from my home in Saskatchewan. This LLC is just starting, this is the 2nd year…I am also self-employed and generated revenue in Canada. I believe I need to file a return in US (Maryland) and file a return in Canada (no question on that). How do the two filing coincide? or do they?

  34. Henry P says:

    Hi Ben,

    I’m a Canadian citizen and have recently got a US Green Card. I’ve a job in Canada and have been filing my return. I plan to take a re-entry permit for US, as I’m not yet planned to move to US. In the mean time, I understand that I’ve file my tax returns in US as well. What’s your advice?


  35. Jerry_c says:

    I live in Vancouver and have been getting my US tax returns prepared by a local CGA. He doesn’t charge much, but I’m concerned that he’s not as knowledgeable as he should be on these matters. I questioned by about the FBAR form and he said it wasn’t something to worry about. After reading about the penalties I’m starting to get worried.

    What should I do??


    • Phil Hogan Phil Hogan says:

      Hi Jerry

      I definitely wouldn’t agree that not filing FBARs is something not to worry about. If you haven’t filed prior year FBARs you may have some options for catching up these information returns.

      Please give me a call at 250-381-2400 and we can run through your options.



  36. Ben says:

    Hi Phil

    I’m a doctor that recently moved from California to practice in Victoria. Most of the MDs up here are incorporated. Considering I need to file both in Canada and the US should I consider incorporation?

    I’ll also need help with my 2015 US/canada tax filings along with my wife and 2 kids.


    • Phil Hogan Phil Hogan says:

      Hi Ben

      Thanks for reaching out. The choice to incorporate will depend on several factors, however it’s often an efficient way to earn professional income.

      If you have the ability to defer or split income with a spouse the savings could be significant. We would however need to review both the Canadian and US tax implications of such a structure.

      Can you give me a call in the office at 250-381-2400 and we can chat.



Leave a Reply

Your email address will not be published. Required fields are marked *

Philip Hogan

Contact Philip Hogan

Contact Me

The information contained in this article is for general use only and should not be viewed as professional advice. Accounting and tax rules and regulations regularly change and individuals should contact a competent professional to obtain accounting and tax advice based on their specific situation.

Phil Hogan


More from this Author

Our dynamic Team are always contributing the latest tips and techniques to keep you in the know with all things tax, accounting, and bookkeeping. See more from this author below.